UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION




Washington,
D.C. 20549


FORM
10-Q





x            QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d)


OF THE
SECURITIES ACT OF 1934





For
the quarterly period ended December 31, 2009


OR


o           TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d)


OF THE
SECURITIES ACT OF 1934





For
the transition period from ___________to ____________





Commission File Number
000-53238


CEMTREX,INC.




(Exact
name of small business issuer as specified in its charter)




Delaware
              (State
      or other jurisdiction of incorporation or
organization)
            30-0399914
              (I.R.S.
      Employer Identification No.)





19
Engineers Lane,


Farmingdale,
New York 11735


(Address,
including zip code, of principal executive offices)





631-756-9116


(Issuer’s
telephone number)





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.




x o




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.




Large
      accelerated filer o
            Accelerated
      filer oNon-accelerated
      filer   o
            Smaller
      reporting company  x





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).




o x




Indicate the number of shares
outstanding of each of the issuer’s classes of common stock, as of the latest
practicable date: As of
February 12, 2010, the issuer the registrant had 39,722,862shares of common stock issued and
outstanding.





Table of
Contents




CEMTREX,
INC.




INDEX




PagePART I.
      FINANCIAL INFORMATIONItem 1.
                    Condensed
      Financial Statements
                    3Consolidated
      Balance Sheets as of December 31, 2009 (Unaudited) and September 30,
      2008
                    3Consolidated
      Statements of Operations for the Three Months Ended December 31, 2008 and
      December 31, 2009 (Unaudited)
                    4Consolidated
      Statements of Cash Flows for the Three Months Ended December 31, 2008 and
      December 31, 2009 (Unaudited)
                    5Notes
      to Unaudited Condensed Consolidated Financial Statements
                    6Item
      2.
                    Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                    13Item
      3.
                    Quantitative
      and Qualitative Disclosures about Market Risk
                    25Item
      4.
                    Controls
      and Procedures
                    25PART
      II.
                    OTHER
      INFORMATION
                    26Item
      1.
                    Legal
      Proceedings
                    26Item
      2.
                    Unregistered
      Sales of Equity Securities and Use of Proceeds
                    30Item
      3.
                    Defaults
      Upon Senior Securities
                    30Item
      4.
                    Submission
      of Matters to a Vote of Security Holders
                    30Item
      5.
                    Other
      Information
                    30Item
      6.
                    Exhibits
                    30SIGNATURES
                    32


2


Part I. Financial
Information




Item
1. Financial Statements





Cemtrex,
Inc. and Subsidiary


Consolidated
Balance Sheets




(UNAUDITED)December 31,
                      
                      
                      September 30,2009
                      
                      
                      2009AssetsCurrent
      AssetsCash
      & Equivalents
                      
                      $
                      6,675
                      
                      
                      $
                      356,552Accounts
      Receivable
                      
                      
                      1,237,609
                      
                      
                      
                      948,815Inventory
                      
                      
                      355,747
                      
                      
                      
                      334,102Prepaid
      Expenses & Other Assets
                      
                      
                      12,250
                      
                      
                      
                      14,650Total
      Current Assets
                      
                      
                      1,612,281
                      
                      
                      
                      1,654,119Property
      & Equipment, Net
                      
                      
                      79,175
                      
                      
                      
                      85,138Other
                      
                      
                      4,225
                      
                      
                      
                      4,225Total
      Assets
                      
                      $
                      1,695,681
                      
                      
                      $
                      1,743,482Liabilities
      & Stockholders' Equity (Deficit)Current
      LiabilitiesAccounts
      Payable
                      
                      $
                      906,004
                      
                      
                      $
                      876,799Accrued
      Expenses
                      
                      
                      381,579
                      
                      
                      
                      387,877Total
      Current Liabilities
                      
                      
                      1,287,583
                      
                      
                      
                      1,264,676Non-Current
      LiabilitiesNotes
      Payable-Related Party
                      
                      
                      352,728
                      
                      
                      
                      390,520Total
      Non-Current Liabilities
                      
                      
                      352,728
                      
                      
                      
                      390,520Total
      Liabilities
                      
                      $
                      1,640,311
                      
                      
                      $
                      1,655,196Commitments
      & Contingencies
                      
                      
                      -
                      
                      
                      
                      -Stockholders'
      Equity (Deficit)Preferred
      Stock Series A, $0.001 par value, 10,000,000 shares authorized,1,000,000
      shares issued and outstanding, respectively
                      
                      $
                      1,000
                      
                      
                      $
                      1,000Common
      Stock, $0.001 par value, 60,000,000 shares authorized, 39,722,862 shares
      issued and outstanding
                      
                      
                      39,723
                      
                      
                      
                      39,723Additional
      Paid-in Capital
                      
                      
                      42,606
                      
                      
                      
                      42,606Retained
      Earnings (Accumulated Deficit)
                      
                      
                      (27,959
                      )
                      
                      
                      4,957Total
      Stockholders' Equity (Deficit)
                      
                      
                      55,370
                      
                      
                      
                      88,286Total
      Liabilities & Stockholders' Equity (Deficit)
                      
                      $
                      1,695,681
                      
                      
                      $
                      1,743,482





The
accompanying notes are an integral part of these financial
statements


3


Cemtrex,
Inc. and Subsidiary


Consolidated
Statements of Operations


(UNAUDITED)




For
      the Three Months EndedDecember
      31,2009
                        
                        
                        2008Revenues
                        
                        $
                        891,454
                        
                        
                        $
                        2,220,961Cost
      of Goods Sold
                        
                        
                        419,499
                        
                        
                        
                        1,315,518Gross
      Profit
                        
                        
                        471,955
                        
                        
                        
                        905,443Operating
      ExpensesResearch
      and Development
                        
                        
                        5,535
                        
                        
                        
                        -General
      and Administrative
                        
                        
                        498,426
                        
                        
                        
                        765,693Total
      Operating Expenses
                        
                        
                        503,961
                        
                        
                        
                        765,693Operating
      Income (Loss)
                        
                        
                        (32,006
                        )
                        
                        
                        139,750Other
      Income (Expense)Interest
      Expense
                        
                        
                        (4,355
                        )
                        
                        
                        (29,745
                        )Total
      Other  Income (Expense)
                        
                        
                        (4,355
                        )
                        
                        
                        (29,745
                        )Net
      Income (Loss) Before Income Taxes
                        
                        
                        (36,361
                        )
                        
                        
                        110,005Provision
      for Income Taxes
                        
                        
                        3,445
                        
                        
                        
                        -Net
      Income (Loss)
                        
                        $
                        (32,916
                        )
                        
                        $
                        110,005Income
      (Loss) Per Share-Basic
                        
                        $
                        (0.00
                        )
                        
                        $
                        0.00Income
      (Loss) Per Share-Diluted
                        
                        $
                        (0.00
                        )
                        
                        $
                        0.00Weighted
      Average Number of Shares-Basic
                        
                        
                        36,397,337
                        
                        
                        
                        34,327,862Weighted
      Average Number of Shares-Diluted
                        
                        
                        36,397,337
                        
                        
                        
                        34,327,862





The
accompanying notes are an integral part of these financial
statements


4


Cemtrex,
Inc. and Subsidiary


Consolidated
Statements of Cash Flows


(UNAUDITED)







For
      the Three Months EndedDecember
      31,2009
                          
                          
                          2008Cash
      Flows from Operating ActivitiesNet
      Income (Loss)
                          
                          $
                          (32,916
                          )
                          
                          $
                          110,005Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
      & Amortization
                          
                          
                          5,963
                          
                          
                          
                          8,604Changes
      in operating assets and liabilities:Accounts
      Receivable
                          
                          
                          (288,794
                          )
                          
                          
                          792,264Inventory
                          
                          
                          (21,645
                          )
                          
                          
                          (20,976
                          )Prepaid
      Expenses & Other Assets
                          
                          
                          2,400
                          
                          
                          
                          (227,275
                          )Accounts
      Payable
                          
                          
                          29,205
                          
                          
                          
                          69,992Accrued
      Expenses
                          
                          
                          (6,298
                          )
                          
                          
                          (67,684
                          )Net
      Cash Used in Operating Activities
                          
                          
                          (312,085
                          )
                          
                          
                          664,930Cash
      Flows from Investing ActivitiesPurchase
      of Property and Equipment
                          
                          
                          -
                          
                          
                          
                          (1,098
                          )Net
      Cash Used in Investing Activities
                          
                          
                          -
                          
                          
                          
                          (1,098
                          )Cash
      Flows from Financing ActivitiesNet
      Notes from Related Party
                          
                          
                          (37,792
                          )
                          
                          
                          (467,171
                          )Net
      Cash Provided by Financing Activities
                          
                          
                          (37,792
                          )
                          
                          
                          (467,171
                          )Net
      Increase (Decrease) in Cash
                          
                          
                          (349,877
                          )
                          
                          
                          196,661Cash
      Beginning of Period
                          
                          
                          356,552
                          
                          
                          
                          60,610Cash
      End of Period
                          
                          $
                          6,675
                          
                          
                          $
                          257,271Supplemental
      Disclosure of Cash Flow Information:Cash
      Paid during the period for interest
                          
                          $
                          -
                          
                          
                          $
                          -Cash
      Paid during the period for income taxes
                          
                          
                          -
                          
                          
                          
                          -





The
accompanying notes are an integral part of these financial
statements


5


Note
1 – Organization, Business & Operations




Cemtrex,
Inc. and its wholly-owned subsidiary Griffin Filters, LLC (collectively the
“Company”), is engaged in manufacturing and selling the most advanced
instruments for emission monitoring of particulate, opacity, mercury, sulfur
dioxide, nitrogen oxides, etc. Cemtrex also provides turnkey services for carbon
creation projects from abatement of greenhouse gases pursuant to Kyoto protocol
and assists project owners in selling of carbon credits globally. Company's
products are sold to power plants, refineries, chemical plants, cement plants
& other industries including federal and state governmental agencies.
Through its wholly-owned subsidiary, Griffin Filters, the Company designs,
manufactures and sells air filtration equipment and systems to control
particulate emissions in a variety of industries.




Cemtrex,
Inc. was incorporated as Diversified American Holding, Inc. on April 27, 1998.
On December 16, 2004, the Company changed its name to Cemtrex, Inc. On April 30,
2007, Cemtrex, Inc. acquired Griffin Filters, LLC (see Note 5 – Business
Combination and Related Party Transactions).




Note
2 - Summary of Significant Accounting Policies




Principles
of Consolidation




The
accompanying consolidated financial statements include the accounts of Cemtrex,
Inc. and its wholly subsidiary Griffin Filters, LLC (collectively the
“Company”). All significant inter-company accounts and transactions have been
eliminated in consolidation.




The
acquisition of Griffin Filters, LLC by Cemtrex, Inc. was treated as a business
combination due to the fact that the acquired entity and purchased entity were
owned by the same individual. Therefore, these consolidated financial statements
have been retrospectively adjusted for all periods presented.




Accounting
Method




The
Company’s financial statements are prepared using the accrual method of
accounting. The Company has elected a September 30 year-end.




Cash
and cash equivalents




The
Company considers all liquid investments with a maturity of three months or less
from the date of purchase that are readily convertible into cash to be cash
equivalents.




Concentrations
of Credit Risk - Cash




The
Company maintains its cash with various financial institutions, which may exceed
federally insured limits throughout the period.




Inventories




Inventories
are comprised of replacement parts, system components and finished systems,
which are stated at lower of cost or market. Cost is determined on a first-in,
first-out (FIFO) basis.




Property
and Equipment




Property
and equipment are stated at cost and are depreciated using the straight-line
method over their estimated useful lives, generally five to seven years.
Leasehold improvements are amortized over the shorter of the useful life or the
remaining lease term. Upon retirement or other disposition of these assets, the
cost and related accumulated depreciation are removed from the accounts and the
resulting gains or losses are reflected in operations. Expenditures for
maintenance and repairs are charged to operations as incurred. Renewals and
betterments are capitalized.


6


Impairment
of long-lived assets




In July
2009, the Company adopted FASB ASC Topic 360, "Accounting for the Impairment or
Disposal of Long-Lived Assets" (previously "SFAS 144"). This topic addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets. The Company periodically evaluates the carrying value of long-lived
assets to be held and used in accordance with this topic. This topic requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amounts. In
that event, a loss is recognized based on the amount by which the carrying
amount exceeds the fair market value of the long-lived assets. Loss on
long-lived assets to be disposed of is determined in a similar manner, except
that fair market values are reduced for the cost of disposal.




Basic
and Diluted Net Income per Share




Basic
earnings per share is calculated using the weighted-average number of common
shares outstanding during the period without consideration of the dilutive
effect of stock warrants and convertible notes. Diluted earnings per share is
calculated using the weighted-average number of common shares outstanding during
the period after consideration of the dilutive effect of stock warrants and
convertible notes.




Revenue
recognition




Sales of
products and related costs of products sold are recognized when (i) persuasive
evidence of an arrangement exists, (ii) delivery has occurred, (iii) the price
is fixed or determinable and (iv) collectability is reasonably assured. These
terms are typically met upon shipment of finished goods to the
customer.




Allowance
for doubtful accounts




We
provide an allowance for estimated uncollectible accounts receivable balances
based on historical experience and the aging of the related accounts receivable.
As of December, 31, 2009 and September 30, 2009, the Company has reserved
$200,000 for doubtful accounts.




Advertising




The
Company expenses advertising costs as incurred. The Company incurred $12,684 and
$0 in advertising costs for the three months ended December 31, 2009 and 2008,
respectively.




Income
Taxes




In July
2009, the Company adopted FASB ASC 749 "Accounting for Income Taxes" (previously
SFAS 109). Under this topic the Company accounts for income taxes using the
liability method where deferred tax assets and liabilities are determined based
on differences between their financial reporting and tax basis of assets and
liabilities.




Significant
judgment is required in determining any valuation allowance recorded against
deferred tax assets. In assessing the need for a valuation allowance, the
Company considers all available evidence including past operating results,
estimates of future taxable income, and the feasibility of tax planning
strategies. In the event that the Company changes its determination as to the
amount of deferred tax assets that can be realized, the Company will adjust its
valuation allowance with a corresponding impact to the provision for income
taxes in the period in which such determination is made.




Research
and development costs




Expenditures
for research & development are expenses as incurred. Such costs are required
to be expensed until the point that technological feasibility is established.
The Company incurred $5,535 and $0 in research and development costs for the
three months ended December 31, 2009 and 2008, respectively.




Stock-based
compensation




In July
2009, the Company adopted FASB ASC Topic 718, "Share-Based Payment" (previously
"SFAS 123(R)"). This topic requires that companies account for awards of equity
instruments issued to employees under the fair value method of accounting and
recognize such amounts in their statements of operations. Under this topic, we
are required to measure compensation cost for all stock-based awards at fair
value on the date of grant and recognize compensation expense in our
consolidated statements of operations over the service period that the awards
are expected to vest.


7


The
Company accounts for stock-based compensation issued to non-employees and
consultants in accordance with the provisions of FASB ASC Topic 718,
"Share-Based Payment" (previously "SFAS 123(R)").  Under this topic
Common stock issued to non-employees in exchange for services is accounted for
based on the fair value of the services received.




Fair
value of financial instruments




In July
2009, the Company adopted FASB ASC Topic 825, "Disclosures about Fair Value of
Financial Instruments"(previously SFAS No. 107). This topic requires that the
Company disclose estimated fair values of financial instruments. The carrying
amounts reported in the statements of financial position for current assets and
current liabilities qualifying as financial instruments are a reasonable
estimate of fair value.




Reclassifications




Certain
items in the prior year financial statements have been reclassified for
comparative purposes to conform to the presentation in the current period’s
presentation. These reclassifications have no effect on the previously reported
income (loss).




Recently
Issued Accounting Pronouncements




The
adoption of these accounting standards had the following impact on the Company’s
statements of income and financial condition:




·
            FASB
      ASC Topic 855, “Subsequent Events”. In May 2009, the FASB issued FASB ASC
      Topic 855, which establishes general standards of accounting and
      disclosure of events that occur after the balance sheet date but before
      financial statements are issued or are available to be issued. In
      particular, this Statement sets forth : (i) the period after the balance
      sheet date during which management of a reporting entity should evaluate
      events or transactions that may occur for potential recognition or
      disclosure in the financial statements, (ii) the circumstances under which
      an entity should recognize events or transactions occurring after the
      balance sheet date in its financial statements, (iii) the disclosures that
      an entity should make about events or transactions that occurred after the
      balance sheet date. This FASB ASC Topic should be applied to the
      accounting and disclosure of subsequent events. This FASB ASC Topic does
      not apply to subsequent events or transactions that are within the scope
      of other applicable accounting standards that provide different guidance
      on the accounting treatment for subsequent events or transactions. This
      FASB ASC Topic was effective for interim and annual periods ending after
      June 15, 2009, which was June 30, 2009 for the Corporation. The adoption
      of this Topic did not have a material impact on the Company’s financial
      statements and disclosures.




·
            FASB
      ASC Topic 105, “The FASB Accounting Standard Codification and the
      Hierarchy of Generally Accepted Accounting Principles”. In June 2009, the
      FASB issued FASB ASC Topic 105, which became the source of authoritative
      GAAP recognized by the FASB to be applied by nongovernmental entities.
      Rules and interpretive releases of the SEC under authority of federal
      securities laws are also sources of authoritative GAAP for SEC
      registrants. On the effective date of this FASB ASC Topic, the
      Codification will supersede all then-existing non-SEC accounting and
      reporting standards. All other non-SEC accounting literature not included
      in the Codification will become non-authoritative. This FASB ASC Topic
      identify the sources of accounting principles and the framework for
      selecting the principles used in preparing the financial statements of
      nongovernmental entities that are presented in conformity with GAAP. Also,
      arranged these sources of GAAP in a hierarchy for users to apply
      accordingly. In other words, the GAAP hierarchy will be modified to
      include only two levels of GAAP: authoritative and non-authoritative. This
      FASB ASC Topic is effective for financial statements issued for interim
      and annual periods ending after September 15, 2009. The adoption of this
      topic did not have a material impact on the Company’s disclosure of the
      financial statements




·
            FASB
      ASC Topic 320, “Recognition and Presentation of Other-Than-Temporary
      Impairments”. In April 2009, the FASB issued FASB ASC Topic 320 amends the
      other-than-temporary impairment guidance in GAAP for debt securities to
      make the guidance more operational and to improve the presentation and
      disclosure of other-than-temporary impairments on debt and equity
      securities in the financial statements. This FASB ASC Topic does not amend
      existing recognition and measurement guidance related to
      other-than-temporary impairments of equity securities. The FASB ASC Topic
      shall be effective for interim and annual reporting periods ending after
      June 15, 2009, with early adoption permitted for periods ending after
      March 15, 2009. Earlier adoption for periods ending before March 15, 2009,
      is not permitted. This FASB ASC Topic does not require disclosures for
      earlier periods presented for comparative purposes at initial adoption. In
      periods after initial adoption, this FASB ASC Topic requires comparative
      disclosures only for periods ending after initial adoption. The adoption
      of this Topic did not have a material impact on the Company’s financial
      statements and disclosures.


8


The
Company is evaluating the impact that the following recently issued accounting
pronouncements may have on its financial statements and
disclosures.




·
            FASB
      ASC Topic 860, “Accounting for Transfer of Financial Asset”., In June
      2009, the FASB issued additional guidance under FASB ASC Topic 860,
      “Accounting for Transfer and Servicing of Financial Assets and
      Extinguishment of Liabilities", which improves the relevance,
      representational faithfulness, and comparability of the information that a
      reporting entity provides in its financial statements about a transfer of
      financial assets; the effects of a transfer on its financial position,
      financial performance, and cash flows; and a transferor’s continuing
      involvement, if any, in transferred financial assets. The Board undertook
      this project to address (i) practices that have developed since the
      issuance of FASB ASC Topic 860, that are not consistent with the original
      intent and key requirements of that statement and (ii) concerns of
      financial statement users that many of the financial assets (and related
      obligations) that have been derecognized should continue to be reported in
      the financial statements of transferors. This additional guidance requires
      that a transferor recognize and initially measure at fair value all assets
      obtained (including a transferor’s beneficial interest) and liabilities
      incurred as a result of a transfer of financial assets accounted for as a
      sale. Enhanced disclosures are required to provide financial statement
      users with greater transparency about transfers of financial assets and a
      transferor’s continuing involvement with transferred financial assets.
      This additional guidance must be applied as of the beginning of each
      reporting entity’s first annual reporting period that begins after
      November 15, 2009, for interim periods within that first annual reporting
      period and for interim and annual reporting periods thereafter. Earlier
      application is prohibited. This additional guidance must be applied to
      transfers occurring on or after the effective
  date.




·
            FASB
      ASC Topic 810, “Variables Interest Entities”. In June 2009, the FASB
      issued FASB ASC Topic 810, which requires an enterprise to perform an
      analysis to determine whether the enterprise’s variable interest or
      interests give it a controlling financial interest in a variable interest
      entity. This analysis identifies the primary beneficiary of a variable
      interest entity as the enterprise that has both of the following
      characteristics: (i)The power to direct the activities of a variable
      interest entity that most significantly impact the entity’s economic
      performance and (ii)The obligation to absorb losses of the entity that
      could potentially be significant to the variable interest entity or the
      right to receive benefits from the entity that could potentially be
      significant to the variable interest entity. Additionally, an enterprise
      is required to assess whether it has an implicit financial responsibility
      to ensure that a variable interest entity operates as designed when
      determining whether it has the power to direct the activities of the
      variable interest entity that most significantly impact the entity’s
      economic performance. This FASB Topic requires ongoing reassessments of
      whether an enterprise is the primary beneficiary of a variable interest
      entity and eliminate the quantitative approach previously required for
      determining the primary beneficiary of a variable interest entity, which
      was based on determining which enterprise absorbs the majority of the
      entity’s expected losses, receives a majority of the entity’s expected
      residual returns, or both. This FASB ASC Topic shall be effective as of
      the beginning of each reporting entity’s first annual reporting period
      that begins after November 15, 2009, for interim periods within that first
      annual reporting period, and for interim and annual reporting periods
      thereafter. Earlier application is
prohibited.


9


·
            FASB
      ASC Topic 820, “Fair Value measurement and Disclosures”, an Accounting
      Standard Update. In September 2009, the FASB issued this Update to
      amendments to Subtopic 82010, “Fair Value Measurements and Disclosures”.
      Overall, for the fair value measurement of investments in certain entities
      that calculates net asset value per share (or its equivalent). The
      amendments in this Update permit, as a practical expedient, a reporting
      entity to measure the fair value of an investment that is within the scope
      of the amendments in this Update on the basis of the net asset value per
      share of the investment (or its equivalent) if the net asset value of the
      investment (or its equivalent) is calculated in a manner consistent with
      the measurement principles of Topic 946 as of the reporting entity’s
      measurement date, including measurement of all or substantially all of the
      underlying investments of the investee in accordance with Topic 820. The
      amendments in this Update also require disclosures by major category of
      investment about the attributes of investments within the scope of the
      amendments in this Update, such as the nature of any restrictions on the
      investor’s ability to redeem its investments at the measurement date, any
      unfunded commitments (for example, a contractual commitment by the
      investor to invest a specified amount of additional capital at a future
      date to fund investments that will be made by the investee), and the
      investment strategies of the investees. The major category of investment
      is required to be determined on the basis of the nature and risks of the
      investment in a manner consistent with the guidance for major security
      types in GAAP on investments in debt and equity securities in paragraph
      320-10-50-lB. The disclosures are required for all investments within the
      scope of the amendments in this Update regardless of whether the fair
      value of the investment is measured using the practical expedient. The
      amendments in this Update apply to all reporting entities that hold an
      investment that is required or permitted to be measured or disclosed at
      fair value on a recurring or non recurring basis and, as of the reporting
      entity’s measurement date, if the investment meets certain criteria The
      amendments in this Update are effective for the interim and annual periods
      ending after December 15, 2009. Early application is permitted in
      financial statements for earlier interim and annual periods that have not
      been issued.




·
            FASB
      ASC Topic 740, “Income Taxes”, an Accounting Standard Update. In September
      2009, the FASB issued this Update to address the need for additional
      implementation guidance on accounting for uncertainty in income taxes. The
      guidance answers the following questions: (i) Is the income tax paid by
      the entity attributable to the entity or its owners? (ii) What constitutes
      a tax position for a pass-through entity or a tax-exempt not-for-profit
      entity? (iii) How should accounting for uncertainty in income taxes be
      applied when a group of related entities comprise both taxable and
      nontaxable entities? In addition, this Updated decided to eliminate the
      disclosures required by paragraph 740-10-50-15(a) through (b) for
      nonpublic entities. The implementation guidance will apply to financial
      statements of nongovernmental entities that are presented in conformity
      with GAAP. The disclosure amendments will apply only to nonpublic entities
      as defined in Section 740-10-20. For entities that are currently applying
      the standards for accounting for uncertainty in income taxes, the guidance
      and disclosure amendments are effective for financial statements issued
      for interim and annual periods ending after September 15,
      2009.




Note
3 - Inventory




The
Company values its inventory under the FIFO method of costing under the lower of
cost or market pricing model. The Company reviews its product for old and or
obsolete items and adjusts accordingly. The Company’s inventory consists of
finished and raw material product.




Note
4 - Property and Equipment




At
December 31, 2009 and September 30, 2009, property and equipment are comprised
of the following:




(UNAUDITED)December
      31,
                  
                  
                  September
      30,2009
                  
                  
                  2009Furniture
      and Office Equipment
                  
                  $
                  97,611
                  
                  
                  $
                  97,611Computer
      Software
                  
                  
                  13,609
                  
                  
                  
                  13,609Machinery
      and Equipment
                  
                  
                  68,942
                  
                  
                  
                  68,942Less:
      Accumulated Depreciation
                  
                  
                  (100,987
                  )
                  
                  
                  (95,024
                  )Net
      Property & Equipment
                  
                  $
                  79,175
                  
                  
                  $
                  85,138




Depreciation
for the three months ended December 31, 2009 and 2008 was $5,963 and $8,604,
respectively.


10


Note
5 – Business Combination and Related Party Transactions





On April
30, 2007, the Company purchased, though a business combination, all of the
issued and outstanding membership interests of Griffin Filters LLC, (“Griffin”)
a company established since 1971 and engaged in the design, engineering &
supplying of industrial air filtration equipment from its President. Aron Govil,
the Chairman, Chief Executive Officer, Treasurer and President of the Company,
was the owner of 100% of the issued and outstanding membership interests of
Griffin. The Company purchased 100% ownership in Griffin for a purchase price of
$2,750,000.00. The Company completed the Griffin purchase by (i) paying cash of
$700,000; (ii) issuing 20,000,000 shares of common stock valued at $750,000; and
(iii) issuing a four year convertible debenture in the amount of $1,300,000 (see
Note 7). Griffin had sales and net income of $3,297,409 and $145,981
respectively for fiscal year ended September 30, 2006. Griffin is now a
wholly-owned subsidiary of the Company.





The
Company recorded the combination of Griffin Filters, LLC as a “As is Pooling”
because of the related party interest as follows:





Accounts
      Receivable
                  
                  $
                  530,506Inventory
                  
                  
                  49,668Property
      & Equipment, Net
                  
                  
                  67,018Other
      Assets
                  
                  
                  4,225Accounts
      Payable
                  
                  
                  (600,348
                  )Additional
      Paid-in-Capital
                  
                  
                  2,698,931Total
                  
                  $
                  2,750,000




These
consolidated financial statements have been retrospectively adjusted for all
periods presented.




In
addition, the Company had the following related party transactions:




·
            The
      Company sold to Ducon Technologies India product totaling $450,000. Ducon
      is an enterprise owned by the majority stockholder of the
      Company.




·
            The
      Company leases space from Ducon Technologies, a related party, on a month
      to month basis.




Note
6 – Note Payable Related Party




Note
Payables to a shareholder and related entity totaling $352,728 is due October 1,
2011 and accrues interest at 5% per annum.




Note
7 – Convertible Debenture




On
September 8th, 2009, Cemtrex, Inc. entered into a letter agreement with Arun
Govil, the Chairman, Chief Executive Officer, Treasurer and President of the
Company. Pursuant to the letter agreement Arun Govil agreed to cancel the
convertible promissory note, held by him, dated April 30, 2007.  The
principal balance of the Note was $1,300,000. Pursuant to the terms of the Note,
the Outstanding Amount was convertible into 30,000,000 shares of the Company’s
common stock. Pursuant to the letter agreement, in return for cancelling the
Note, the Company issued Arun Govil 2,500,000 shares of common stock of the
Company, par value $0.001 and 1,000,000 shares of Series A Preferred Stock of
the Company, par value $0.001 per share. Mr. Govil agreed to forfeit 27,500,000
shares of common stock issuable as per the original terms of the
Note.




Note
8– Stockholders’ Equity




Series
A Preferred Stock




The
Company is authorized to issue 10,000,000 shares of Series A Preferred Stock,
$0.001 par value. As of December 31, 2009 and September 30, 2009, there were
1,000,000 shares issued and outstanding.




Each
issued and outstanding Series A Preferred Share shall be entitled to the number
of votes equal to the result of: (i) the number of shares of common stock of the
Company issued and outstanding at the time of such vote multiplied by 1.01;
divided by (ii) the total number of Series A Preferred Shares issued and
outstanding at the time of such vote, at each meeting of shareholders of the
Company with respect to any and all matters presented to the shareholders of the
Company for their action or consideration, including the election of directors.
Holders of Series A Preferred Shares shall vote together with the holders of
Common Shares as a single class.


11


On
September 8th , 2009, the Company issued 1,000,000 Series A Preferred Shares to
Arun Govil, the Chairman, Chief Executive Officer, Treasurer and President of
the Company, in conjunction with the of the conversion of a convertible note
(see Note 7).




Common
Stock




The
Company is authorized to issue 60,000,000 shares of common stock, $0.001 par
value. As of December 31, 2009 and September 30, 2009, there were 39,722,862
shares issued and outstanding.




On
September 8th , 2009, the Company issued 2,500,000 common shares to Arun Govil,
the Chairman, Chief Executive Officer, Treasurer and President of the Company,
in conjunction with the of the conversion of a convertible note (see Note
7).  In addition, the Company issued 2,895,000 common shares for cash
totaling $8,525.




Note
10 – Commitments & Contingencies




Lease
Obligations




The
Company leases its principal office at Farmingdale, New York, 4000 square feet
of office and warehouse/shop space in a single story commercial structure on a
month to month lease from Ducon Technologies Inc., at a monthly rental of
$2,157.




The
Company’s subsidiary Griffin Filters LLC leases approx. 10,000 sq. ft. of office
and warehouse space in Liverpool, New York from a third party in a five year
lease at a monthly rent of $4,225 expiring on March 31, 2012.




Legal
Proceedings




The
Company is not currently involved in any lawsuits or litigation.




Note
11 - Subsequent Events




The
Company has evaluated all subsequent events through February 12, 2010, the date
this Quarterly Report on Form 10-Q was filed with the SEC. There were no
recognized or unrecognized events requiring disclosure as significant subsequent
events.


12


Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations




FORWARD-LOOKING
STATEMENTS




Statements
in this report may be "forward-looking statements." Forward-looking statements
include, but are not limited to, statements that express our intentions,
beliefs, expectations, strategies, predictions or any other statements relating
to our future activities or other future events or conditions. These statements
are based on current expectations, estimates and projections about our business
based, in part, on assumptions made by management. These statements are not
guarantees of future performance and involve risks, uncertainties and
assumptions that are difficult to predict. Therefore, actual outcomes and
results may, and are likely to, differ materially from what is expressed or
forecasted in the forward-looking statements due to numerous factors, including
those described above and those risks discussed from time to time in this
report, including the risks described under "Risk Factors" in our Form 10 filed
June 19, 2008 and any risks described in any other filings we make with the SEC.
Any forward-looking statements speak only as of the date on which they are made,
and we do not undertake any obligation to update any forward-looking statement
to reflect events or circumstances after the date of this report.




Our
discussion and analysis of our financial condition and results of operations are
based upon our financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States. The preparation
of these financial statements requires us to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses. On an
on-going basis, we evaluate these estimates, including those related to
useful lives of real estate assets, cost reimbursement income, bad debts,
impairment, net lease intangibles, contingencies and litigation. We base our
estimates on historical experience and on various other assumptions that
are believed to be reasonable under the circumstances, the results of which form
the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. There can be no
assurance that actual results will not differ from those estimates.




OVERVIEW




Cemtrex
Inc. ("Cemtrex" or the "Company") is a Delaware corporation that
designs,  engineers, assembles and sells emission monitoring equipment
and instruments through its MIP division to measure opacity, mercury, sulfur
oxides, hydrocarbons, nitrogen oxides, ammonia, carbon dioxide and oxygen in
flue gases discharging the stacks in industries such
as:  chemicals,  pulp and paper, steel, power, cement,
coal  and  petrochemical.   Cemtrex provides
consulting services on projects that create carbon credits, and also markets
technologies for controlling greenhouse gases such as Methane from coal mines.
Company sells energy efficiency product called Green DCV, which creates energy
efficiency in an existing HVAC system in commercial and industrial facilities by
monitoring carbon dioxide levels.  The Company through its Griffin
Filters subsidiary, supplies air filtration and environmental control systems
for industrial applications.




On April
27, 1998, the Company was incorporated in the state of Delaware under the name
“Diversified American Holdings, Inc.”  The Company subsequently
changed its name to “Cemtrex Inc.” on December 16, 2004.




On April 30, 2007, the Company
purchased all of the issued and outstanding membership interests of Griffin
Filters LLC, (“Griffin”) a company established since 1971 and engaged in the
design, engineering & supplying of industrial air filtration equipment from
its President & Chief executive officer, Arun Govil, who was the 100% owner
of  the issued and outstanding membership interests of
Griffin.  The purchase price of $ 2,750,000.00 was paid
by  (i) paying cash of $700,000.00, (ii) issuing 20,000,000 shares of
common stock valued at $750,000.00 and (iii) issuing a four year convertible
debenture in the amount of $1,300,000.00, paying interest of 8.0% per year and
convertible into 30,000,000 shares of common stock. Griffin had sales and net
income of $3,297,409 and $145, 981 respectively for
fiscal year ended September 30, 2006. Griffin is now a wholly-owned subsidiary
of the Company.


13




On
September 8, 2009, the Company entered into a letter agreement with Arun Govil,
the Chairman, Chief Executive Officer, Treasurer and President of the Company.
Pursuant to the letter agreement Arun Govil agreed to cancel the convertible
promissory note, held by him, dated April 30, 2007 (the " Note
").  The principal balance of the Note was $1,300,000. Pursuant to the
terms of the Note, the outstanding amount was convertible into 30,000,000 shares
of our common stock. Pursuant to the letter agreement, in return for cancelling
the Note, the Company issued Arun Govil 2,500,000 shares of our common stock and
1,000,000 shares of our Series A Preferred Stock.  Pursuant to the
Certificate of Designation of the Preferred Stock, each issued and outstanding
Preferred Stock shall be entitled to the number of votes equal to the result of:
(i) the number of shares of Common Stock issued and outstanding at the time of
such vote multiplied by 1.01; divided by (ii) the total number of Preferred
Stock issued and outstanding at the time of such vote, at each meeting of
shareholders of the Company with respect to any and all matters presented to the
shareholders of the Company for their action or consideration, including the
election of directors. In consideration of the issuance of the Common Stock and
Preferred Stock described above, Mr. Govil agreed to forfeit 27,500,000 shares
of our common stock issuable as per the original terms of the Note.




The
Company designs, engineers, assembles and sells emission monitoring equipment
and instruments to the chemicals, pulp and paper, steel, power, coal and
petrochemical industries, as well as to municipalities, hospitals, and state and
federal governments. Our emission monitoring systems are installed at the
exhaust stacks of industrial facilities and are used to measure the outlet flue
gas concentrations of regulated pollutants, such as sulfur dioxide, hydrogen
chloride, hydrogen sulfide, nitrous oxides, ammonia, nitrogen oxide, carbon
dioxide, carbon monoxide and other regulated pollutants. Through use of our
equipment and instrumentation, our clients can monitor the exhausts to the
atmosphere from their facilities and comply with Environmental Protection Agency
and state and local emission regulations on dust, particulate, fumes, acid gases
and other regulated pollutants into the atmosphere.




The
Company is also involved in providing turnkey services for carbon credit
projects from abatement of greenhouse gases pursuant to Kyoto protocol and
assists project owners in selling of carbon credits globally. Carbon Credits are
emission offsets that are generated from greenhouse gases abatement, renewable
energy such as solar & wind, and energy efficiency projects which displace
carbon emissions from traditional fossil fuel sources like coal, oil or gas with
the subsequent reduction in greenhouse gas emissions. Companies, agencies and
governments buy, sell, bank and trade Carbon Credits called Certified Emission
Reductions or CERs.  Cemtrex provides consulting services for such projects
and arranges for investment equity and the sales of CERs for its customers.
Company also markets MCDR technology for generating carbon credits from control
of Methane from coal mines.




Company
has recently developed an energy efficiency product line named Green DCV, which
provides energy efficiency in HVAC systems for commercial buildings and
industrial installations. Cemtrex’s Green-DCV system uses carbon dioxide (CO2)
sensors to monitor CO2 levels inside a building, and then regulate the HVAC
air-handling system to save energy and improve air quality. Cemtrex Green-DCV
can provide significant   energy savings in buildings where
occupancy fluctuates during a 24-hour period, such as: office buildings,
government facilities, shopping malls, movie theaters, restaurants &
schools.




Company
through its subsidiary griffin Filters provides a complete line of air
filtration and environmental control equipment to industries such as: chemical,
cement, steel, food, construction, mining, & petrochemical. Griffin’s
equipment is used to: (i) remove dust, corrosive fumes, mists, hydrocarbons,
volatile organic compounds, submicron particles and particulate from industrial
exhausts and boilers; (ii) clean noxious and acid gases such as sulfur dioxide,
hydrogen chloride, hydrogen sulfide,
chlorides,  and  organics from  industrial exhaust
stacks prior to discharging to the atmosphere; (iii) control emissions of coal,
dust, sawdust, phosphates, flyash, cement, carbon black, soda ash, silica, etc.
from construction facilities, mining operations and dryer exhausts.




INDUSTRY
BACKGROUND




The
market for environmental control systems and technologies is directly dependent
upon governmental regulations and their enforcement. During the past three
decades, federal, state and local governments have realized the contaminated air
poses significant threats to public health and safety, and, in response, have
enacted legislation designed to curb emissions of a variety of air
pollutants.  Management believes that the existence of governmental
regulations creates demand for Company’s emission monitoring equipment and
environmental control systems.


14


These
governmental regulations affect nearly every industrial activity. The principal
federal legislation that was created is the Clean Air Act of 1970, as amended
9th Clean Air Act). This legislation requires compliance with ambient air
quality standards and empowers the Environmental Protection Agency (EPA) to
establish and enforce limits on the emissions of various pollutants from
specific types of facilities. The states have primary responsibility for
implementing these standards and, in some cases, have adopted standards more
stringent than those established by the EPA. In 1990, amendments to the Clean
Air Act were adopted which address, among  other things, the country
acid rain problem by imposing strict control on the emissions of sulfur dioxide
from power plants.  During 1997, EPA approved regulations for ozone
related emissions and in 1998 EPA issued regulations requiring utilities in 22
states to significantly reduce Nitrogen oxides emissions.




According
to scientists, the Earth's surface has risen in temperature by about 1 degree
Fahrenheit in the past century. There is increasing evidence that certain human
activities are contributing to this change in temperature through activities
that increase the levels of greenhouse gases, primarily carbon dioxide, methane,
and nitrous oxide, in the atmosphere. Greenhouse gases trap heat that would
normally escape back into the atmosphere, thus increasing the Earth's natural
greenhouse effect and increasing temperature over time.




The
Earth's climate is predicted to change because human activities are altering the
chemical composition of the atmosphere through the buildup of greenhouse
gases—primarily carbon dioxide (CO2), methane
(CH4),
and nitrous oxide (NOx). The
heat-trapping property of these gases is undisputed. Although uncertainty exists
about exactly how Earth's climate responds to these gases, global temperatures
are rising.




EPA
Clean Air market Programs




EPA’s
Clean air market programs include various market-based regulatory programs
designed to improve air quality. Clean air markets include various market-based
regulatory programs designed to improve air quality by reducing outdoor
concentrations of fine particles, sulfur dioxide, nitrogen oxides, mercury,
ozone and other significant air emissions. The most well-known of these programs
are EPA’s Acid Rain
Program and the NOxTrading Programs,
which reduce emissions of sulfur dioxide (SO2) and
nitrogen oxides (NOx)–compounds
produced by fossil fuel combustion.




Acid
Rain Program




The goal
of the Acid Rain Program is to achieve significant environmental and public
health benefits through reductions in emissions of sulfur dioxide (SO2) and
nitrogen oxides (NOx), the
primary causes of acid rain. To achieve this goal at the lowest cost to society,
the program employs both traditional and innovative, market-based approaches for
controlling air pollution. In addition, the program encourages energy efficiency
and pollution prevention.




"Acid
rain" is a broad term referring to a mixture of wet and dry deposition
(deposited material) from the atmosphere containing higher than normal amounts
of nitric and sulfuric acids. The precursors, or chemical forerunners, of acid
rain formation result from both natural sources, such as volcanoes and decaying
vegetation, and man-made sources, primarily emissions of SO2
and NOxresulting from fossil fuel combustion. In the United States, roughly 2/3
of all SO2 and 1/4 of
all NOx come from
electric power generation that relies on burning fossil fuels, like coal. 
Acid rain occurs when these gases react in the atmosphere with water, oxygen,
and other chemicals to form various acidic compounds. The result is a mild
solution of sulfuric acid and nitric acid. When sulfur dioxide and nitrogen
oxides are released from power plants and other sources, prevailing winds blow
these compounds across state and national borders, sometimes over hundreds of
miles.


15


NOx
Trading Program




The goal
of the NOx Trading Program is to reduce the transport of ground-level ozone
across large distances. The Ozone Transport Commission
(OTC) NOxBudget Program was
implemented from 1999 to 2002 and was replaced by the NOxBudget Trading
Program—also known as the “NOx SIP
Call”—in 2003. The NOxSIP
Call  Program is a market-based cap and trade program created
to reduce emissions of nitrogen oxides (NOx) from
power plants and other large combustion sources in the eastern United States.
NOx is a prime ingredient in the formation of ground-level ozone (smog), a
pervasive air pollution problem in many areas of the eastern United States. The
NOx
Budget Trading Program was designed to reduce NOx emissions
during the warm summer months, referred to as the ozone season, when
ground-level ozone concentrations are highest.




Clean Air Interstate Rule
(CAIR)




On March
10, 2005, EPA issued the Clean Air Interstate Rule (CAIR). This rule provides
states with a solution to the problem of power plant pollution that drifts from
one state to another. CAIR covers 28 eastern states and the District of
Columbia. The rule uses a cap and trade system to reduce the target
pollutants—sulfur dioxide (SO2) and
nitrogen oxides (NOx)—by 70
percent.




The goal
of the Clean Air Interstate Rule (CAIR) is to permanently cap emissions of
SO2
and NOx in the
eastern U.S. States must achieve the required emission reductions using one of
two compliance options: (1) meet the state’s emission budget by requiring power
plants to participate in an EPA-administered interstate cap and trade system, or
(2) meet an individual state emissions budget through measures of the state’s
choosing.




Clean Air Mercury Rule
(CAMR)





On March
15, 2005, EPA issued the Clean Air Mercury Rule (CAMR) to permanently cap and
reduce mercury emissions from coal-fired power plants for the first time ever.
This rule makes the United States the first country in the world to regulate
mercury emissions from utilities.





The goal
of the Clean Air Mercury Rule (CAMR) is to reduce mercury emissions from
coal-fired power plants through “standards of performance” for new and existing
utilities and a market-based cap and trade program.





CAMR
establishes “standards of performance” limiting mercury emissions from new and
existing coal-fired power plants, and creates a market-based cap and trade
program that will reduce nationwide utility emissions of mercury in two distinct
phases. The first phase cap is 38 tons and emissions will be reduced by taking
advantage of “co-benefit” reductions—that is, mercury reductions achieved by
reducing sulfur dioxide (SO2) and
nitrogen oxides (NOx) emissions
under Clean Air
Interstate Rule (CAIR). In the second phase, due in 2018, coal-fired
power plants will be subject to a second cap, which will reduce emissions to 15
tons upon full implementation.





EPA
Emission Monitoring Requirements





EPA’s
emissions monitoring requirements are designed to ensure the compliance with its
current regulations pursuant to various programs. The emission monitoring
requirements ensure that the emissions data collected is of a known, consistent,
and high quality, and that the mass emissions data from source to source are
collected in an equitable manner. This is essential to support the Clean Air
Markets Program’s mission of promoting market-based trading programs as a means
for solving air quality problems





Continuous
emissions monitoring (CEM) is instrumental in ensuring that the mandated
reductions of SO2, NOxmercury
and other pollutants are achieved. While traditional emissions limitation
programs have required facilities to meet specific emissions rates, the current
Program requires an accounting of each ton of emissions from each regulated
unit. Compliance is then determined through a direct comparison of total
annual  emissions reported by CEM and allowances held for the
unit.





CEM is
the continuous measurement of pollutants emitted into the atmosphere in exhaust
gases from combustion or industrial processes. EPA has established requirements
for the continuous monitoring of SO2,
volumetric flow, NOx, diluent
gas, and opacity for units regulated under the Acid Rain Program. In addition,
procedures for monitoring or estimating carbon dioxide (CO2) are
specified. The CEM rule also contains requirements for equipment performance
specifications, certification procedures, and recordkeeping and
reporting.


16





The Acid
Rain Program uses a market-based approach to reduce SO2 emissions
in a cost-effective manner. (One allowance is an authorization to emit 1 ton of
SO2
during or after a specified calendar year; a utility may buy, sell, or hold
allowances as part of its compliance strategy.) Complete and accurate emissions
data are key to implementing this market-based approach.





An
essential feature of smoothly operating markets is a method for measuring the
commodity being traded. The CEM data supplies the gold standard to back up the
paper currency of emissions allowances. The CEM requirements, therefore,
management believes instills confidence in the market-based approach by
verifying the existence and value of the traded allowance.





The owner
or operator of a unit regulated under the Acid Rain Program must install CEM
systems on the unit unless otherwise specified in the regulation. CEM systems
include:


·
            An
      SO2
      pollutant concentration monitor.


·
            A
      NOx
      pollutant concentration monitor.


·
            A
      volumetric flow monitor.


·
            An
      opacity monitor.


·
            A
      diluent gas (O2 or
      CO2)
      monitor.


·
            A
      computer-based data acquisition and handling system (DAHS) for recording
      and performing calculations with the
data.





All CEM
systems must be in continuous operation and must be able to sample, analyze, and
record data at least every 15 minutes. All emissions and flow data will be
reduced to 1-hour averages. The rule specifies procedures for converting the
hourly emissions data into the appropriate units of measure.





The
following is a summary of monitoring method requirements and
options:


·
            All
      existing coal-fired units serving a generator greater than 25 megawatts
      and all new coal units must use CEMs for SO2,
      NOx,
      flow, and opacity.


·
            Units
      burning natural gas may determine SO2 mass
      emissions by: (1) measuring heat input with a gas flowmeter and using a
      default emission rate; or (2) sampling and analyzing gas daily for sulfur
      and using the volume of gas combusted; or (3) using
  CEMs.


·
            Units
      burning oil may monitor SO2 mass
      emissions by one of the following
methods:


1.
            daily
      manual oil sampling and analysis plus oil flow meter (to continuously
      monitor oil usage)


2.
            sampling
      and analysis of diesel fuel oil as-delivered plus oil flow
      meter


3.
            automatic
      continuous oil sampling plus oil flow
meter


4.
            SO2 and
      flow CEMs.


·
            Gas-fired
      and oil-fired base-loaded units must use NOx
      CEMs.


·
            Gas-fired
      peaking units and oil-fired peaking units may either estimate NOx
      emissions by using site-specific emission correlations and periodic stack
      testing to verify continued representativeness of the correlations, or use
      NOx
      CEMS. The emission correlation method has been significantly streamlined
      in the revised rule.


·
            All
      gas-fired units using natural gas for at least 90 percent of their annual
      heat input and units burning diesel fuel oil are exempt from opacity
      monitoring.


·
            For
      CO2 all
      units can use either (1) a mass balance estimation, or (2) CO2
      CEMs, or (3) O2 CEMs
      in order to estimate CO2
      emissions.





PRODUCTS




The
Company’s MIP division offers a range of products and systems, incorporating
diverse technologies, to address the needs of a wide variety of industries and
their environmental regulations. Management believes that the Company provides a
single source responsibility for design, engineering, assembly, installation and
maintenance of systems to its customers. The Company’s products are designed to
operate so as to allow its users to determine their compliance with the latest
governmental emissions regulations.  The Company’s products measure
the concentrations of various regulated pollutants in the flue gases discharging
the exhaust stacks at various utilities and industries.


17




The MIP
division’s current products include the following:




Opacity
monitor: Compliance & non-compliance types




Management
believes that the Company’s Laser Opacity monitor provides the highest accuracy
and long-term reliability available for stack opacity and dust
measurements.  An EPA-compliant monitoring system, the monitor is a
lightweight, efficient solution for determining opacity or dust concentration in
stack gases.  Proven in many installations worldwide, it advances the
state of opacity monitoring with higher levels of accuracy, flexible
installation and reduced long-term maintenance




Extractive
Continuous Emission Monitors (CEMS)




Cemtrex
provides direct-extractiveanddilution-extractive
CEMS  equipment & systems that are applicable for utilities,
industrial boilers, FGD systems, SCR-NOx control, furnaces, gas turbines,
process heaters, incinerators, and process controls.  In addition to
traditional CEMS designed for maximum reliability and minimal maintenance in
monitoring criteria pollutants, the Company can also accurately quantify other
gaseous compounds through in-situ or extractive FTIR systems. The Company’s
Extractive CEMS can be configured to monitor for one or all of the following: •
NOx • SO2 • CO2 • O2 • CO • THC • Mercury • H2S • HCl & HF Acid • NH3 •
Particulate • Opacity • Volumetric Flow and Moisture.




Ammonia
Analyzer




The flue
gas stream which contain ammonia, nitrogen oxides and in some cases sulfur
dioxide utilize Ultra Violet radiation techniques for measurements. All these
components absorb UV radiation, and therefore can be monitored by process
analyzers that utilize UV absorbance techniques for detection.




Mercury
Analyzer




The EPA
Clean Air Mercury rule requires that all coal fired power plants must provide
continuous mercury monitoring by 2009. Management believes that Cemtrex's SM4
mercury monitor, a result of 10 years experience in mercury monitoring business,
provides reliable online measurements at a much lower cost than any other
competing model in the market. Cemtrex SM4 is the first instrument working on a
thermo catalytic principle avoiding wet chemical sample treatment. As a
consequence, the Company has found that maintenance demand has been drastically
minimized. We believe that it is the only monitor that required no maintenance
at a coal fired utility wet stack, no carrier gases, no water and 95% data
availabilitySM4 uses straight extractive Teflon sheathed Hastelloy probe with no
plugging or corrosion.




The
Company ‘s carbon Credits division  provides consulting
services  for carbon credit projects from abatement of greenhouse
gases pursuant to Kyoto protocol and assists project owners in developing such
projects globally. Carbon Credits are emission offsets that are generated from
greenhouse gases abatement, renewable energy such as solar & wind, and
energy efficiency projects which displace carbon emissions from traditional
fossil fuel sources like coal, oil or gas with the subsequent reduction in
greenhouse gas emissions. Companies, agencies and governments buy, sell, bank
and trade Carbon Credits called Certified Emission Reductions or
CERs.   Company provides complete services such as registering
the project to be eligible to generate carbon credits and  arrange for
the required funding.  Company also markets MCDR technology for
generating carbon credits from control of Methane from coal mines.




Company’s
energy Efficiency division  has recently developed an energy
efficiency product line named Green DCV,  which
provides  energy efficiency in HVAC systems for commercial buildings
and industrial installations. Cemtrex’s Green-DCV system uses carbon dioxide
(CO2) sensors to monitor CO2 levels inside a building, and then regulate the
HVAC air-handling system to save energy and improve air quality. Cemtrex
Green-DCV can provide significant   energy savings in buildings
where occupancy fluctuates during a 24-hour period, such as: office buildings,
government facilities, shopping malls, movie theaters, restaurants &
schools.




18


Company
through its subsidiary griffin Filters provides a complete line of air
filtration and environmental control equipment to industries such as: chemical,
cement, steel, food, construction, mining, & petrochemical. Griffin’s
equipment is used to: (i) remove dust, corrosive fumes, mists, hydrocarbons,
volatile organic compounds, submicron particles and particulate from industrial
exhausts and boilers; (ii) clean noxious and acid gases such as sulfur dioxide,
hydrogen chloride, hydrogen sulfide,
chlorides,  and  organics from  industrial exhaust
stacks prior to discharging to the atmosphere; (iii) control emissions of coal,
dust, sawdust, phosphates, flyash, cement, carbon black, soda ash, silica, etc.
from construction facilities, mining operations and dryer exhausts.




PRODUCT
DEVELOPMENT




The
Company is currently in the process of developing technology for economically
controlling carbon dioxide emissions from power plant flue gases that already
have installed wet limestone scrubbers utilizing a proprietary chemical. Company
is carrying out an in-house  pilot test program to develop this
technology for carbon dioxide reduction.




The
Company is not dependent on, nor expects to become dependent on, any one or a
limited number of suppliers.  The Company buys parts and components to
assemble its equipment and products. The Company does not manufacture or
fabricate its own products or systems.  The Company relies on
sub-suppliers and third party vendors to procure from or fabricate its
components based on its design, engineering and specifications. The Company also
enters into subcontracts for field installation, which the Company supervises;
and Company manages all technical, physical and commercial aspects of the
performance of the Company contracts. To date, the Company has not experienced
difficulties either in obtaining fabricated components and other materials and
parts or in obtaining qualified subcontractors for installation
work.




PARTS,
REPAIR AND REFURBISHMENT SERVICES




The
Company also provide  replacement  and
spare  parts  and  repair  and  refurbishment
services for our emission monitoring systems following the expiration of our
warranties  which  generally range up to  12
months. The Company has experienced only minimal costs from its
warranties.




The
Company’s standard terms of sale disclaim any liability for consequential or
indirect losses or damages stemming from any failure of our products or systems
or any component thereof.  The Company seeks indemnification from its
subcontractors for any loss, damage or claim arising from the subcontractors'
failure to perform.




COMPETITION




The
Company faces substantial competition in each of its principal
markets.  Most of its competitors are larger and have greater
financial resources than the Company; several are divisions of multi-national
companies. The Company competes on the basis of price, engineering and
technological expertise, know-how and the quality of our products, systems and
services.  Additionally, the Company’s management believes that the
successful performance of the Company’s installed products and systems is a key
factor in gaining business as customers typically prefer to make significant
purchases from a company with a solid performance history.


19


We
obtain virtually all our contracts through competitive bidding. Although price
is an important factor and may in some cases be the
governing  factor,  it is not always determinative, and
contracts are often awarded on the basis of the
efficiency  or  reliability  of  products  and  the  engineering  and  technical
expertise of the bidder.  Several companies market products that compete
directly with our products.  Other companies offer products that
potential customers may consider to be acceptable alternatives to our products
and services.  We face direct competition from companies with far
greater financial, technological, manufacturing and personnel resources,
including Thermo Fisher Scientific Inc., Tekran Instruments Corporation, Altech
Environment USA, Shaw Group, and Horiba Instruments Inc. in the emissions
monitoring business.




INTELLECTUAL
PROPERTY




Over the
years, the Company has developed proprietary technologies that give us an edge
in competing with its competitors. Thus, the Company relies on a combination of
trade secrets and know-how to protect its intellectual property. The Company has
not filed any patents.




MARKETING




The
Company relies on manufacturing representatives, distributors, direct
salespersons, magazine advertisements, internet advertising, trade shows, trade
directories and catalogue listings to market our products and services. The
Company uses more than eight manufacturing sales representatives in the United
States backed by our senior management and technical professionals. The
Company’s arrangements with independent sales representatives accord each a
defined territory within which to sell some or all of
our  products  and  systems,  provide  for
the payment of  agreed-upon  sales
commissions  and
are  terminable  at  will.  The
Company’s sales representatives do not have authority to execute contracts on
the Company’s behalf.




The
Company’s sales representatives also serve as ongoing liaison function between
us and our customers during the installation phase of our products and systems
and address customers' questions or concerns arising thereafter. The Company
selects representatives based upon industry reputation, prior sales performance
including number of prospective leads generated and sales closure rates, and the
breadth of territorial coverage, among other criteria.




Technical
inquiries received from potential customers are referred to our engineering
personnel. Thereafter, the Company’s sales and engineering personnel jointly
prepare a budget for future planning, a proposal, or a final bid.  The
period between initial customer contact and issuance of an order is generally
between two and twelve months.




CUSTOMERS




The
Company’s principal customers are engaged in refining, power, chemical, mining
and metallurgical
processing.  Historically,  most  of our
customers  have  purchased  individual  products  or  systems  which,  in  many
instances, operate in conjunction with products and systems supplied by others.
For several years, the Company has marketed its products as integrated custom
engineered emission monitoring systems and environmental management solutions.
No one single customer accounts for a large percentage of our annual
sales.




On most
projects, the Company is responsible to its customers for all phases of the
design, assembly, supply and, if included, field installation of its products
and systems. The successful completion of a project is generally determined by a
successful operational test of the supplied equipment conducted by our field
service technician in the presence of the customer.




20


TECHNOLOGY




The
Company has developed a broad range of emission monitoring technological
base.  The Company’s equipment and instruments are used: (i) to
measure particulate, carbon dioxide, nitrogen oxides, mercury and sulfur dioxide
from coal-fired power plants, (ii) to measure particulate from cement plants,
(iii) to measure hydrocarbons, particulate and sulfur dioxide from refineries,
(iv) to measure hydrogen sulfide, carbon monoxide, ammonia, hydrocarbons and
other regulated pollutants from chemical plants, steel plants, incinerators and
other industrial exhausts. Our emission monitors are capable of meeting all
current federal and local emission monitoring standards.  Company also
markets technologies for control of Methane from coal mines and creating energy
efficiency in HVAC systems through monitoring of carbon dioxide for commercial
buildings and industrial installations.  The Company has not filed any
patents with respect to its technology.




BONDING
AND INSURANCE




While
only a very few of our contracts require the Company to procure bid and
performance bonds, such requirements are prevalent for large projects or
projects  partially or fully funded by federal, state or local
governments. A bid bond guarantees that a bidder will execute a contract if it
is awarded the job and a performance bond guarantees performance of the
contract.  The Company does not presently have a bank credit line to
back bid or performance bonds. Thus, the Company cannot bid on certain
contracts.




In
certain cases, the Company is able to secure large contracts by accepting
progress payments with retention provisions in lieu of bonds.




The
Company currently maintains different types of insurance, including general
liability and property coverage.  The Company does not maintain
product liability insurance with respect to its products and
equipment.  Management believes that the insurance coverage that it is
adequate for our current business needs.




GOVERNMENT
REGULATION




Significant
environmental laws, particularly the Federal Clean Air Act, have been enacted in
response to public concern about the environment.  The Company believe
that compliance with and enforcement of these laws and  regulations
create the demand for our products and systems and largely
determine  the level
of  expenditures  that  customers  will  make  to  monitor
the  emissions  from  their facilities. The
Federal Clean Air Act, initially adopted in 1970 and extensively amended in
1990, requires compliance with ambient air quality standards and empowers the
EPA to establish and enforce limits on the emission of various pollutants from
specific types of industrial facilities.  States have primary
responsibility for implementing these standards, and, in some cases, have
adopted more stringent standards.




The
1990  amendments  to the  Federal  Clean
Air Act  require, among other matters, reductions in the emission of
sulfur oxides, believed to be the cause of "acid rain," in the emission of 189
identified  hazardous air pollutants and
toxic  substances  and
the  installation  of  equipment  and
systems  which will contain certain named toxic substances used in
industrial processes in the event
of  sudden,  accidental,  high-volume  releases.  Such  amendments  also  extend
regulatory coverage to many facilities previously exempt due to their small size
and  require  the EPA
to  identify  those  industries  which
will be required to install the mandated control  technology for the
industry to reduce the emission of hazardous air pollutants from
their  respective  plants
and  facilities.  The Montreal Protocol, adopted in 1987, as
well as EPA regulations issued in 1992, call for the phase-out of CFCs. In
addition,  regulations promulgated by the EPA in
1993  further  limit  the  concentration  of  pollutants,  such  as  hydrogen
chloride, sulfur dioxide,  chlorine, heavy metals and hazardous solid
substances in the form of extremely  fine dust,  from
sewage  sludge  incinerators.  Sewage sludge
facilities are required to comply with these regulations. Compliance with all
these regulations can only be achieved by first monitoring the pertinent
emission levels.


21


EMPLOYEES




The
Company employs 18 full time and three part time employees, consisting of four
executive officers, three managers, six technical engineers, and five clerical
and administrative support persons.  None of our employees are
represented by a labor union. In addition, the Company utilizes commission sales
personnel and contract design engineers, on an as needed basis. There are no
employment agreements.




FACILITIES




The
Company does not own any real estate.




The
Company leases its principal office at Farmingdale, New York, 4000 square feet
of office and warehouse/shop space in a single story commercial structure on a
month to month lease from Ducon Technologies Inc., at a monthly rental of
2,157.00. The Company’s subsidiary Griffin Filters LLC leases approx. 10,000 sq.
ft. of office and warehouse space in Liverpool, New York from a third party in a
five year lease at a monthly rent of $ 4,858.00 expiring on March 30,
2012.  The Company has no plans to acquire any property in the
immediate future. The Company believes that its current facilities are adequate
for its needs through the next six months, and that, should it be needed,
suitable additional space will be available to accommodate expansion of the
Company's operations on commercially reasonable terms, although there can be no
assurance in this regard. There are no written agreements.




FINANCIAL
CONDITION




The
following table sets forth selected historical consolidated financial data from
our consolidated financial statements and should be read in conjunction with our
consolidated financial statements including the related notes and this
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations” section hereof.




For the
three month period ended December 31, 2009, we generated revenues of $891,454
which is a decrease of $1,329,507 from the three month period ended December 31,
2008.  For the three month period ended December 31, 2009, we
generated a net loss of ($32,916).  For the three month period ended
December 31, 2008, we had a net income of $110,005.   The
following table summarizes these results:
  For the Three Months
      Ended
                  December 312009
                
                
                2008Revenues
                
                $
                891,454
                
                
                $
                2,220,961Operating
      Expenses
                
                $
                503,961
                
                
                $
                765,963Net Income
      (Loss)
                
                $
                (32,916
                )
                
                $
                110,005Income (Loss) Per Share-Basic and
      Diluted
                
                
                0.00
                
                
                
                0.00Weighted Average Number of
      Shares
                
                
                36,397,337
                
                
                
                34,327,862
  As at
              
              
              As atDecember 31
              
              
              September
302009
              
              
              2009Current
    Assets
              
              $
              1,612,281
              
              
              $
              1,654,119Total
Assets
              
              $
              1,695,681
              
              
              $
              1,743,482Total
      Liabilities
              
              $
              1,640,311
              
              
              $
              1,655,196Total Stockholders’
      Equity
              
              $
              55,370
              
              
              $
              88,286
  22
  CRITICAL
ACCOUNTING POLICIES AND ESTIMATES
  The
following discussion and analysis is based upon our consolidated financial
statements which have been prepared in accordance with accounting principles
generally accepted in the United States of America. The preparation of our
financial statements requires management to make estimates and assumptions that
affect the reported amounts of revenues and expenses, and assets and liabilities
during the periods reported. Estimates are used when accounting for certain
items such as revenues, allowances for returns, early payment discounts,
customer discounts, doubtful accounts, employee compensation programs,
depreciation and amortization periods, taxes, inventory values,  and
valuations of investments, goodwill, other intangible assets and long-lived
assets. We base our estimates on historical experience, where applicable and
other assumptions that we believe are reasonable under the circumstances. Actual
results may differ from our estimates under different assumptions or conditions.
We believe that the following critical accounting policies affect our more
significant judgments and estimates used in preparation of our consolidated
financial statements.
  We
maintain allowances for doubtful accounts for estimated losses resulting from
the inability of our customers to make required payments. We base our estimates
on the aging of our accounts receivable balances and our historical write-off
experience, net of recoveries.
  We value
our inventories at the lower of cost or market. We write down inventory balances
for estimated obsolescence or unmarketable inventory equal to the difference
between the cost of the inventory and the estimated market value based upon
assumptions about future demand and market conditions.
  Goodwill
is reviewed for possible impairment at least annually or more frequently upon
the occurrence of an event or when circumstances indicate that the Company’s
carrying amount is greater than the fair value. In accordance with SFAS 142, the
Company examined goodwill for impairment and determined that the Company’s
carrying amount did not exceed the fair value, thus, there was no
impairment.
  Generally,
sales are recognized when shipments are made to customers. Rebates, allowances
for damaged goods and other advertising and marketing program rebates are
accrued pursuant to contractual provisions and included in accrued expenses.
Certain amount of our revenues fall under the percentage-of-completion method of
accounting used for long-term contracts. Under this method, sales and gross
profit are recognized as work is performed based on the relationship between
actual costs incurred and total estimated costs at completion. Sales and gross
profit are adjusted prospectively for revisions in estimated total contract
costs and contract values. Estimated losses are recorded when
identified.
  RESULTS
OF OPERATIONS
 Net Sales: Net sales for three months ended
December 31, 2009 decreased by $1,329,507 or 60%, to $891,454 from $2,220961 for
the three months ended December 31,2008.Sales growth decreased during the three
month period ended December 31, 2009 primarily due to decreased sales in the MIP
division.
 
 Gross Profit: Net loss for the three months
ended December 31, 2009 was $32,916 which made up 4% of net
sales   as compared to $110,005 for the three months ended
December 31, 2008, which was 5% of net sales. .   The lower gross
margin in the three months ended December 31, 2009 was a direct result of low
profit margin jobs booked and shipped due to the difficult economic climate as
compared to the previous quarter and also due to the direct results of the lower
margin products mix shipped during the period.
  Operating Expenses: Operating expenses for the
three months ended December 31, 2009 decreased $261,732, or 35%, to $503,961
from $765,693 for the three months ended December 31, 2008. Operating expenses
as a percentage of sales increased in the three month period ended December
31,2009 to 57% from 35% in the three month period ended December 31, 2008. The
increase in operating expenses  in the current quarter were primarily
due to increased sales and marketing expenses for promoting Company’s green DCV
and ventilation air methane MCDR product lines.
  Net Income/Loss: The Company had net loss of
$32,916 which was 4% of net sales, for the three month period ended December 31
2009 as compared to a net income of $110,005 which was 5% of net sales, for the
three month ended December 31,008. The loss in the current quarter as compared
to the previous quarter a year ago was a result of higher  sales and
marketing  expenses for promoting Company’s green DCV and ventilation
air methane MCDR product lines and lower gross profit made on shipments made
during the current quarter. The lower net income percentage in this period as
compared to the previous one was a result of lower gross margin sales
and  higher operating expenses due to higher  sales and
marketing  expenses for promoting Company’s green DCV and ventilation
air methane MCDR product lines.
 
 Provision for Income Taxes: There is no
provision for income for this period due net loss of $32,916.
  23
  EFFECTS
OF INFLATION
  The
Company’s business and operations have not been materially affected by inflation
during the periods for which financial information is presented.
  LIQUIDITY AND CAPITAL RESOURCES
  Working
capital was $324,698 at December 31 2009, compared to $389,443 at September 30,
2009. This included cash and cash equivalents of $6,675 at December 31, 2009 and
$356,552 at September 30, 2009, respectively. The reason for the decrease in
working capital was due to non profitability of operations during this
period.
  Trade
receivables increased  $288,794 or 31% at December 31, 2009 to
$1,237,609 at December 31,2009 from $948,815 at September 30, 2009. The increase
in accounts receivable is attributable to terms and timing of order shipments
from customers.
  Inventories
increased  $21,645or 7% to $355,747 at
December 31, 2009 from $334,102 at September 30, 2009.  The increase
inventory was due to timing of order shipment from customers and receipt of
fresh inventories.
  Continuing
operations provided $312,085 of cash for the three months ended December 31,
2009, compared to usage of $664,930.  The decrease in cash flows was
primarily related to payments of account payable and collection of account
receivables timing.   Investing activities for continuing
operations generated $0 of cash during the three months ended December 31, 2009,
compared to use of $1,098 cash during the three months ended December 31,
2008.    The financing activities during the three months
ended December 31, 2009 used up $37,792 in cash from repayment of loans to
shareholder and provided $467,171 in cash for the three month period ended
December 31, 2008 from loan proceeds.
  We
believe that our cash on hand, cash generated by operations, is sufficient to
meet the capital demands of our current operations during the 2010 fiscal year.
Any major increases in sales, particularly in new products, may require
substantial capital investment. Failure to obtain sufficient capital could
materially adversely impact our growth potential.




Outlook




We
anticipate that the outlook for our products and services remains quite strong
and we are positioned well to take advantage of it.




We
believe there is currently a gradually increasing public awareness of the issues
surrounding air quality and that this trend will continue for the next several
years. We also believe there is an increase in public concern regarding the
effects of air quality on society and future generations, as well as an increase
in interest by standards-making bodies in creating specifications and techniques
for detecting, defining and solving air quality problems. As a result, we
believe there will be an increase in interest in our mercury monitors, opacity
monitors, carbon credits and air filtration products of subsidiary Griffin
Filters.




President
Obama has promised to invest $150bn over 10 years in renewable energy and
environmental control technologies as part of a wider plan to increase US energy
security amid fear of oil shortages, while also reducing the country’s carbon
emissions in a bid to tackle global warming - and create jobs during an economic
downturn. A report from a leading US-based research firm predicts that while the
global carbon market will contract 29 per cent this year to just $84bn, it will
recover quickly over the next four years, growing at an average of 68 per cent a
year to be worth $669bn by 2013. According to official
budget figures released by the Obama administration earlier this year, it
expects to raise $646bn between 2012 and 2019 for the US treasury
throughthe
auctioning of carbon allowances.


24


This
Outlook section, and other portions of this document, include certain
“forward-looking statements” within the meaning of that term in Section 27A of
the Securities Act of 1933, and Section 21E of the Securities Exchange Act of
1934, including, among others, those statements preceded by, following or
including the words “believe,” “expect,” “intend,” “anticipate” or similar
expressions. These forward-looking statements are based largely on the current
expectations of management and are subject to a number of assumptions, risks and
uncertainties. Our actual results could differ materially from these
forward-looking statements. Important factors to consider in evaluating such
forward-looking statements include those discussed in “Risk Factors” as well
as:





•
            the
      shortage of reliable market data regarding the emission monitoring &
      air filtration market,





•
            changes
      in external competitive market factors or in our internal budgeting
      process which might impact trends in our results of
      operations,





•
            anticipated
      working capital or other cash
requirements,





•
            changes
      in our business strategy or an inability to execute our strategy due to
      unanticipated changes in the
market,





•
            product
      obsolescence due to the development of new technologies,
    and





•
            Various
      competitive factors that may prevent us from competing successfully in the
      marketplace.




In light
of these risks and uncertainties, there can be no assurance that the events
contemplated by the forward-looking statements contained in this Form 10QSB will
in fact occur.




Item
3. Quantitative & Qualitative Disclosures about Market Risks




Not
applicable.




Item
4(T). Controls and Procedures




(a)  Evaluation of Disclosure
and Procedures




We
carried out an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) as of December 31, 2009. This evaluation was carried
out under the supervision and with the participation of our President (Chief
Executive Officer), Arun Govil and our Vice President of Finance, Renato Dela
Rama. Based upon that evaluation, our Chief Executive Officer and Vice President
of Finance concluded that, as of December 31, 2009, our disclosure controls and
procedures were and concluded that it is effective as of such date. Any internal
control system, no matter how well designed, will have inherent limitations.
Therefore, even those systems determined to be effective can provide only
reasonable assurance with respect to financial statement preparation and
presentation. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.




Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed in our reports filed or
submitted under the Exchange Act are recorded, processed, summarized and
reported, within the time periods specified in the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in our
reports filed under the Exchange Act is accumulated and communicated to
management, including our Chief Executive Officer and Vice President of Finance,
to allow timely decisions regarding required disclosure.




(b)  Changes
in Internal Controls over financial reporting




There
have been no changes in our internal controls over financial reporting during
our last fiscal quarter, which has materially affected, or is reasonably likely
to materially affect, our internal control over financial
reporting.


25


Part II Other
Information




Item
1. Legal Proceedings




The
Company is not currently a party to any threatened or pending legal proceedings,
other than incidental litigation arising in the ordinary course of
business.  In the opinion of management, the ultimate disposition of these
matters will not have a material adverse effect on the Company’s consolidated
financial position, results of operations or cash flows.




Item
1A Risk Factors




RISKS RELATED TO OUR
BUSINESS




RISK
FACTORS




An
Investment in our common stock involves risks. You should carefully consider the
following risks, as well as the other information contained in this quarterly
report. If any of the following risks actually occur, our business could be
materially harmed.




o    We
are substantially dependent upon the success and market acceptance of our
technology. The failure of the emissions monitoring and controls market to
develop as we anticipate, would adversely affect our business.




The
Company's success is largely dependent on increased market acceptance of our
emission monitoring equipment and control systems. . If acceptance of emissions
monitoring equipment does not continue to grow, then the Company’s revenues may
be significantly reduced.




oIf
we are unable to develop new products, our competitors may develop and market
products with better features that may reduce demand for our potential products.
The Company may not be able to introduce any new products or any enhancements to
its existing products on a timely basis, or at all.  In addition, the
introduction by the Company of any new products could adversely affect the sales
of certain of its existing products. If the Company's competitors develop
innovative emissions testing technology that are superior to the Company's
products or if the Company fails to accurately anticipate market trends and
respond on a timely basis with its own innovations, the Company may not achieve
sufficient growth in its revenues to attain profitability.




oWe
have incurred losses for the three months ended December 31, 2009 and for the
fiscal year ending September 30, 2007, and we may incur losses for the
foreseeable future.


We had a
net loss of $32,916 for the three months ended December 31, 2009. We had net
loss of $123,565 for the fiscal year ended September 30, 2007. These losses have
resulted principally from higher marketing expenses of new product lines and
expenses incurred in the extensive demonstration testing of its new SM4
compliance mercury monitors at various utility sites and the low gross margin
product line of Griffin Filters. We may continue to incur significant
expenditures related to research and development, selling and marketing and
general and administrative activities as well as capital expenditures and
anticipate that our expenses and losses may increase in the foreseeable future
as we expand our business; however, for the year ended September 30, 2009 and
the three month period ended December 31, 2009 we generated a net profit of
$155,010 and a net loss of ($32,916), respectively. Further, as a public company
we will also incur significant legal, accounting and other expenses that we did
not incur as a private company. To achieve sustained profitability, we will need
to generate significant additional revenues with significantly improved gross
margins. It is uncertain when, if ever, we will return to profitability. We
might not be able to sustain or increase profitability on a quarterly or annual
basis.




oThe
Company faces constant changes in governmental standards by which our products
are evaluated.




26


The
Company believes that, due to the constant focus on the environment and clean
air standards throughout the world, a requirement in the future to adhere to new
and more stringent regulations both domestically and abroad is possible as
governmental agencies seek to improve standards required for certification of
products intended to promote clean air.  In the event our products
fail to meet these ever-changing standards, some or all of our products may
become obsolete.




oThe
future growth of our business depends, in part, on enforcement of existing
emissions-related environmental regulations and further tightening of emission
standards worldwide.




The
Company expects that the future business growth will be driven, in part, by the
enforcement of existing emissions-related environmental regulations and
tightening of emissions standards worldwide.  If such standards do not
continue to become stricter or are loosened or are not enforced by governmental
authorities, it could have a material adverse effect on our business, operating
results, financial condition and long-term prospects.




o We may incur
substantial costs enforcing our proprietary information, defending against
third-party patents, invalidating third-party patents or licensing third-party
intellectual property, as a result of litigation or other proceedings relating
to patent and other intellectual property rights.




The
Company considers its technology and procedures proprietary.  In
particular, the Company depends substantially on its flexibility to develop
custom engineered solutions for various applications and be responsive to
customer needs.  The Company has not filed for any patents for its
technologies.




The
Company may be notified of claims that it has infringed a third party's
intellectual property.  Even if such claims are not valid, they could
subject the Company to significant costs. In addition, it may be necessary in
the future to enforce the Company's intellectual property rights to determine
the validity and scope of the proprietary rights of others. Litigation may also
be necessary to defend against claims of infringement or invalidity by
others.  An adverse outcome in litigation or any similar proceedings
could force the Company to take actions that could harm its business. These
include: (i) ceasing to sell products that contain allegedly infringing
property; (ii) obtaining licenses to the relevant intellectual property which
the Company may not be able to obtain on terms that are acceptable, or at all;
(iii) indemnifying certain customers or strategic partners if it is determined
that the Company has infringed upon or misappropriated another party's
intellectual property; and (iv) redesigning products that embody allegedly
infringing intellectual property. Any of these results could adversely affect
the Company's business, financial condition and results of operations. In
addition, the cost of defending or asserting any intellectual property claim,
both in legal fees and expenses, and the diversion of management resources,
regardless of whether the claim is valid, could be significant.




o    Product
defects could cause the Company to incur significant product liability,
warranty, repair and support costs and damage its reputation which would have a
material adverse effect on its business.




Although
the Company rigorously tests its products, defects may be discovered in future
or existing products. These defects could cause the Company to incur significant
warranty, support and repair costs and divert the attention of its research and
development personnel. It could also significantly damage the Company's
reputation and relationship with its distributors and customers which would
adversely affect its business. In addition, such defects could result in
personal injury or financial or other damages to customers who may seek damages
with respect to such losses. A product liability claim against the Company, even
if unsuccessful, would likely be time consuming and costly to
defend.




o    The
markets in which we operate are highly competitive, and many of our competitors
have significantly greater resources than we do.




There is
significant competition among companies that provide emissions monitoring
systems.  Several companies market products that compete directly with
our products.  Other companies offer products that potential customers
may consider to be acceptable alternatives to our products and
services.  We face direct competition from companies with far greater
financial, technological, manufacturing and personnel resources, including
Thermo Fisher Scientific Inc., Tekran Instruments Corporation, Altech
Environment USA, Shaw Group, and Horiba Instruments Inc. in the emissions
monitoring business. Newly developed products could be more effective and cost
efficient than our current or future products.  Many of the current
and potential future competitors have substantially more engineering, sales and
marketing capabilities and broader product lines than we have.


27




o    The
Company’s results may fluctuate due to certain regulatory, marketing and
competitive factors over which we have little or no control.




The
factors listed below, some of which we cannot control, may cause our revenue and
results of operations to fluctuate significantly:




·
            the
      existence and enforcement of government environmental regulations. If
      these regulations are not maintained or enforced then the market for
      Company’s products could
deteriorate;


·
            Retaining
      and keeping qualified employees and management
  personnel;


·
            Ability
      to upgrade our products to keep up with the changing market place
      requirements;


·
            Ability
      to keep up with our competitors who have much higher resources than
      us;


·
            Ability
      to find sub suppliers and sub contractors to assemble and install our
      products;


·
            General
      economic conditions of the industry and the ability of potential customers
      to spend money on setting up new industries that require our
      products;


·
            Ability  to  maintain
      or raise  adequate working capital  required for the
      operations and future growth; and


·
            Ability
      to retain our CEO and other senior key
  personnel.





o   The
loss of our senior management and failure to attract and retain qualified
personnel in a competitive labor market could limit our ability to execute our
growth strategy, resulting a slower rate of growth.




We depend
on the continued service of our senior management. Due to the nature of our
business, we may have difficulty locating and hiring qualified personnel and
retaining such personnel once hired. The loss of the services of any of our key
personnel, or our failure to attract and retain other qualified and experienced
personnel on acceptable terms, could limit our ability to execute our growth
strategy resulting in a slower rate of growth.




o    General
economic downturns in general would have a material adverse effect on the
Company's business, operating results and financial condition.




The
Company's operations may in the future experience substantial fluctuations from
period to period as a consequence of general economic conditions affecting
consumer spending. Therefore, any economic downturns in general would have a
material adverse effect on the Company's business, operating results and
financial condition.




Risks
related to investment in the common stock of the Company




o We may
need additional funds in the future. We may be unable to obtain additional funds
or if we obtain financing it may not be on terms favorable to us. You may lose
your entire investment.




Based on
our current plans, we believe our existing cash and cash equivalents along with
cash generated from operations will be sufficient to fund our operating expenses
and capital requirements through December 31, 2010, although there is no
assurance of this result, we may need funds in the future. If our capital
resources are insufficient to meet future capital requirements, we will have to
raise additional funds. If we are unable to obtain additional funds on terms
favorable to us, we may be required to cease or reduce our operating
activities.




o If we
raise additional funds by selling additional shares of our capital stock, the
ownership interests of our stockholders will be diluted.


28


o Our
stock trades on the Over the Counter Bulletin Board (OTCBB) electronic quotation
system.




The
Company’s Common Stock currently trades on the Over the Counter Bulletin Board
(OTCBB) electronic quotation system under the symbol “CTEI.OB”. The OTCBB is a
decentralized market regulated by the Financial Industry Regulatory Authority in
which securities are traded via an electronic quotation system.  There
can be no assurance that a trading market for the Company's shares will continue
to exist in the future, and there can be no assurance that an active trading
market will develop or be sustained. The market price of the shares of Common
Stock is likely to be highly volatile and may be significantly affected by
factors such as actual or anticipated fluctuations in the Company's operating
results, announcements of technological innovations, new products or new
contracts by the Company or its competitors, developments with respect to
proprietary rights, adoption of new government regulations affecting the
environment, general market conditions and other factors. In addition, the stock
market has from time to time experienced significant price and volume
fluctuations that have particularly affected the market price for the common
stocks of technology companies. These types of broad market fluctuations may
adversely affect the market price of the Company's common stock. SeeRisk Factor “Our stock
price may be highly volatile” below.





o  Our
shares of common stock are thinly traded, so stockholders may be unable to sell
at or near ask prices or at all if they need to sell shares to raise money or
otherwise desire to liquidate their shares.




Our
common stock has from time to time been “thinly-traded,” meaning that the number
of persons interested in purchasing our common stock at or near ask prices at
any given time may be relatively small or non-existent. This situation is
attributable to a number of factors, including the fact that we are a small
company that is relatively unknown to stock analysts, stock brokers,
institutional investors and others in the investment community that generate or
influence sales volume, and that even if we came to the attention of such
persons, they tend to be risk-averse and would be reluctant to follow an
unproven company such as ours or purchase or recommend the purchase of our
shares until such time as we become more seasoned and viable. As a consequence,
there may be periods of several days or more when trading activity in our shares
is minimal or non-existent, as compared to a seasoned issuer which has a large
and steady volume of trading activity that will generally support continuous
sales without an adverse effect on share price. We cannot give stockholders any
assurance that a broader or more active public trading market for our common
shares will develop or be sustained, or that current trading levels will be
sustained.




o Our
common stock will be subject to “penny stock” rules which may be detrimental to
investors.




If our
common stock is not listed on a national exchange or market, the trading market
for our common stock may become illiquid. Our common stock trades on the
over-the-counter electronic bulletin board and, therefore, is subject to the
requirements of certain rules promulgated under the Securities Exchange Act of
1934, which require additional disclosure by broker-dealers in connection with
any trades involving a stock defined as a "penny stock".  The
Securities and Exchange Commission has adopted regulations which generally
define "penny stock" to be any equity security that has a market price (as
defined) of less than $5.00 per share or an exercise price of less than $5.00
per share. The securities will become subject to rules that impose additional
sales practice requirements on broker-dealers who sell such securities. For
transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchaser of such securities and have received
the purchaser's written consent to the transaction prior to the purchase.
Additionally, for any transaction involving a penny stock, unless exempt, the
rules require the delivery, prior to the transaction, of a disclosure schedule
prepared by the Securities and Exchange Commission relating to the penny stock
market. The broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and, if the broker-dealer is the sole market-maker, the broker-dealer
must disclose this fact and the broker-dealer's presumed control over the
market. Finally, among other requirements, monthly statements must be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks. Consequently, the "penny
stock" rules may restrict the ability of purchasers in this offering to sell the
Common Stock offered hereby in the secondary market.


29


o We do
not anticipate paying any dividends.




No
dividends have been paid on the common stock of the Company. The Company does
not intend to pay cash dividends on its common stock in the foreseeable future,
and anticipates that profits, if any, received from operations will be devoted
to the Company's future operations. Any decision to pay dividends will depend
upon the Company's profitability at the time, cash available and other relevant
factors.




o Our
stock price may be  highly volatile.




The
market price of our common stock, like that of many other technology companies,
has been highly volatile and may continue to be so in the future due to a wide
variety of factors, including:




·
            announcements
      of technological innovations by us, our collaborative partners or our
      present or potential competitors;


·
            our
      quarterly operating results and
performance;


·
            developments
      or disputes concerning patents or other proprietary
  rights;


·
            acquisitions;


·
            litigation
      and government proceedings;


·
            adverse
      legislation;


·
            changes
      in government regulations;


·
            economic
      and other external factors; and


·
            general
      market conditions.





In
addition, potential dilutive effects of future sales of shares of common stock
by shareholdersand
by the Company could have an adverse effect on the market price of our
shares.




o Our
principal shareholder has significant influence over our company which could
make it impossible for the public stockholders to influence the affairs of the
Company.




Approximately
65% of our outstanding voting equity is beneficially held by Arun Govil the
Company’s Chairman, Chief executive officer, President and Treasurer as a result
of Mr. Govil’s common stock and Series A preferred stock
ownership.  Consequently, Mr. Govil will be able to control
substantially all matters requiring approval by the stockholders of the Company,
including the election of all directors and approval of significant corporate
transactions. This makes it impossible for the public stockholders to influence
the affairs of the Company.




Item
2.  Unregistered Sales of Equity Securities and Use of
Proceeds:




None.




Item
3. Defaults upon Senior Securities:




None




Item
4. Submission of Matters to a Vote of Security Holders:




None




Item
5. Other Information:




None




Item
6. Exhibits




31.1
      (2)
            Certification
      of Chief Executive Officer as required by Rule 13a-14 or 15d-14 of the
      Exchange Act, as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act
      of 2002.


30




31.2
      (2)
            Certification
      of Vice President of Finance and Principal Financial Officer as required
      by Rule 13a-14 or 15d-14 of the Exchange Act, as adopted Pursuant to
      Section 302 of the Sarbanes-Oxley Act of
2002.





32.1(2)
            Certification
      of Chief Executive Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant
      to Section 906 of the Sarbanes-Oxley Act 0f of
  2002.





32.2
      (2)
            Certification
      of Vice President of Finance and Principal Financial Officer Pursuant to
      18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
      Act 0f of 2002.


31


Signatures




Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.




CEMTREX,
      INC.(Registrant)Dated:
      February 16, 2010
            
            By
            /s/
      Arun GovilArun
      Govil, Chairman of the Board, Chief Executive Officer and President
      (Principal Executive Officer)Dated:
      February 16, 2010
            
            By
            /s/
      Renato Dela RamaRenato
      Dela Rama, Vice President of Finance  (Principal Financial
      Officer)


32